The International Monetary Fund on Saturday said the impact of demonetisation in India had subsided and that industrial production as well as the purchasing managers’ index had recovered, reported PTI. “We are seeing signs that the impact of demonetisation has abated. Some estimates point to about 75% of the cash being replaced,” IMF deputy director, Asia and Pacific department, Kenneth Kang said.

However, Kang said it was important to quickly replace the defunct currency in order to restore transactions and support people’s capacity to spend. Changyong Rhee, director, IMF Asia and Pacific department, said demonetisation certainly had some negative impact on growth, but in 2017, it is expected to gradually fade away. “Thus, our growth is projected to rebound to 7.2% in 2017, and 7.7% in 2018, in fiscal-year basis,” he said.

The International Monetary Fund had in January pegged India’s growth rate for 2016 at 6.6% because of the impact of demonetisation. On April 19, IMF had said India will not lose the tag of being the fastest growing economy in the world to China anytime soon.